Case Law Details
M/s. Nov Sara India Pvt. Ltd Vs Addl. CIT (ITAT Delhi)
Software development expenditure which was held to be capital expenditure by the Assessing Officer holding that it has given a benefit of enduring nature to the assessee. The claim of the assessee is that same is a license fee and, therefore, it cannot be giving any benefit of enduring nature. The learned CIT (Appeals) held that it was for the development of new products and, therefore, same is a capital expenditure.
The above expenditure is product development expenditure and not software development expenditure. The above expenditure has been paid as a professional fees to M/s. Express Marketing, Dehradun, towards development of new product in unit I related to equipment required by rigs in oil industry. It was not a new line of business, but was merely expenditure in development of the existing line of the business. The assessee is engaged in the business of manufacturing of machineries and equipments and development is for the same product. In view of this such expenditure cannot be held to be capital expenditure, but it is a revenue expenditure.
FULL TEXT OF THE ITAT JUDGMENT
These are the cross appeals filed by the assessee and Revenue against the order of Commissioner of Income Tax (Appeals)–I, New Delhi, dated 30.09.2014 for assessment year 2009 10.
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